one bank still holding out on centro ... , page-2

I will make several points in relation to this article, which has always been my long term opinion:-

1. CBA is the most risk averse in the current climate. This not only refers to Centro, CBA also held out with Babcock & Brown where negotiations won't be concluded until the end of 2009, at CBA's demand - there are others as well.

Something happened at CBA about 4 months ago imo that changed their attitude. They were seemingly pro- Centro (& others) and held head stock up to this point; without selling. In my conversations with them ie; Institutional Lending Dept., they were very pro-Centro & generally optimistic. Weeks later they sold all of their shares & their attitude in conversations seemed to me to be totally different. This obviously was 'new policy' and why it specifically occurred is anyone's guess. Personally I have no idea on this specific policy, nor their current view on risks.

2. So - taking Point 1 into account, we are basically in a similar position as the last key milestone (Sept ???), where all Banks & note holders were in agreeance with CBA being the only Bank holding out. It took 11th hour negotiations from Rod Eddington (ANZ/Allco/JPM) to persuade Norris (CBA) to allow Centro's extension.

3. Therefore - Rufrano and the other Bankers are in ground-hog day territory all over again imo, but with one key difference. Whereas in September it was a surprise to ALL that it was the CBA that was holding out (in fact the media spotlight was focusing the general blame game on the German Bank 'WestLB') the Banks, the note holders and Centro (& their Advisors) should be clued into the possibility of CBA withholding and should have a contingency 'Plan B' (through to 'Plan Z' - lol) in place.

4. It is also my opinion that CBA will baulk - so does that mean the roll-over/extension will not progress and thereby allow Centro to fail??? This would be a premature conclusion AND very bad business, not only for Centro but for the other Banks as well for obvious reasons. So the pressure therefore will be squarely on the CBA by all other parties who have agreed.

5. So, what are the options??? This question should be well canvassed in-house. If CBA are the only Bank holding out, then failure of the deal should not be an option imo. The options could well be other Banks/note holders taking up CBA's secured loans (and let them whistle for the unsecured amount). Another possibility is that CBA may be the 'only' Bank to be offered a conversion of its loans into D2E swap, which could be some sort of tradeable or non-tradeable stock.

6. Would Centro (in an effort to appease the CBA) divest itself of an asset other than real property??? An asset such as its interest in CER???


The above are just my initial thoughts to throw into the mix!

Cheers, Pie :)